Borjomi: Crisis In Russia Harvard Case Solution & Analysis

IMD-5-0706 © 2006
Turpin, Dominique; Ogunsulire, Mope

Borjomi is one of Russia’s earliest; best-known and well-loved mineral waters. After going through a steep decline at the end of the Soviet era; the brand was purchased by Georgian Glass & Mineral Water (GGMW) in 1995. Two years after; GGMW hired Frenchman Jacques Fleury— the business turned roughly; and in the year 2001 had re-established Borjomi to its previous glory. In the year 2002; GGMW was bought by the venture capital firm; Salford. Collectively with Fleury; Salford associate; Vladimir Ashurov; led a further transformation of the company turning it from a local; practically family-run company into a professional corporate business; and growing yearly revenue from $25 to $125 million; and from 54 to 366 million liters.

This achievement did not go undetected; and in 2005 GGMW received two offers from multinationals. But Ashurov and Fleury believed there was still considerable room for growth. They made an ambitious strategy to grow Russian sales are  used by Borjomi in as many years. Borjomi fell victim to the increasingly tense relations between Russia and its former satellites; as they prepared to put their strategy into actions. In April 2006; Russia banned imports of Georgian mineral water; following an earlier prohibition on the Georgian and Moldovan wines. With their enlargement plan in danger; what options were left to Fleury and his team? Would Borjomi continue to exist in this danger to make yet another recovery in this largest market. Learning objectives: 1) Crisis management & political risk in emerging markets; 2) Analyze brand development and increase alternatives in an emerging marketplace with powerful traditions; by looking at problems including: a) broadly differing regional markets dominated by low-cost competitors; b) limits of brand extension. 3) Learn about the bottled water industry in the CIS and Russia.

Subjects: Soft drinks; Water; Bottled water; Retail; Retail trade; Marketing; Brand management; Russia; Georgia; CIS; Packaged water; Borjomi; Mineral water
Settings: Russia; Georgia; CIS; Bottled water; beverages; US$122 million sales; 1997-2006

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